Small steps taken in a home garage laid the foundation for what is today India's biggest manufacturer of helmets. Studds Accessories owns two helmet plants with a capacity of 6.1 million helmets and 4.9 lakh units of two-wheeler luggage a year. It is looking to add two more plants to meet the expected rise in demand. The Faridabad-based company, with a turnover of Rs 333 crore, is even planning to go for an initial public offer.

Studds has come a long way from the time brothers Madhu Bhushan Khurana and Ravi Bhushan Khurana sold their first helmet in 1972 under the brand name Rajdoot. In 1970, Madhu Khurana had gone to Lucknow to represent Escorts Motorcycles in a rally. A Rajdoot dealer there pitched the idea for the helmet business saying he can easily sell 50 helmets a month. "We already had a manufacturing unit, Gadgets India, for engineering items. We discussed the idea with Escorts, which helped us with technology, and we started manufacturing helmets under the brand name Rajdoot for Escorts," says Madhu Khurana. After Escorts shut operations due to a labour strike around 1973/74, they started selling helmets independently. The brand Studds got registered in 1975. Studds Accessories was incorporated in 1983.

The brothers parted ways in 1990, when the next generation joined the business. "I picked the brand and he picked the manufacturing facility," says Madhu Khurana. "It was a restart of my career. I as chairman along with my son Sidhartha Bhushan Khurana as managing director started with a small manufacturing unit with a capacity of 40-50 helmets a day, and the brand stood strong. We grew slowly but consistently."

The company consolidated its smaller units in Faridabad in 2009. By 2012, another plant was built. The company launched a premium brand, SMK, in 2016. It is the only manufacturer of premium two-wheeler helmets in India. It also makes two-wheeler lifestyle accessories such as luggage, gloves, helmet security guards, rain suits and eye wear.

Sailing Through the Tide

Although the management seems apprehensive about fetching a good valuation in the IPO, it says the ongoing slowdown in the auto sector has not affected its business. "At the moment, we are not feeling any impact, as replacement cycle has become shorter and the market has grown substantially. Plus, the demand for helmets has increased due to strict enforcement of road safety laws in some states and rise in awareness about safety. There is demand for pillion riders as well," says Sidhartha Khurana. He says the slowdown may hit sales via original equipment manufacturers (OEMs). But OEMs contribute only 11 per cent to the company's revenues. Studds' OEM partners include Hero Motorcycles, Honda, Suzuki Motorcycle India, Royal Enfield, TVS Motor Company and UM Motorcycles.

The demonetisation of high-value currency notes in 2016, however, was a big jolt to Studds. The growth in income fell from 42.48 per cent (to Rs 257 crore) in 2015/16 to just 6.35 per cent (Rs 274 crore) in 2016/17. "We had to shut our factories for two-three months," says Sidhartha. It recorded sales growth of 21.44 per cent in 2017/18. EBITDA margin grew to 16.84 per cent from 13.58 per cent in 2016/17. The company's net profit rose to Rs 32.88 crore in 2017/18 from Rs 23.62 crore in the previous year. The company's debt-to-equity ratio is 0.23. A value below one is considered safe.

The management believes in Kaizen, a Japanese business philosophy of continuous improvement. Posters depicting this, along with other motivational quotes, are placed across its factories. All manufacturing units are squeaky clean and well organised. Most of the manufacturing process is automated.

Recently, the company enhanced safety measures to comply with the Bureau of Indian Standards' new regulations. It claims to be the only company in India whose laboratory is certified by the European Safety Agency. "Compliance is the culture of the company. It's a way of life," says Sidhartha. The company has also complied with integrated reporting standards that SEBI had mandated in 2017 for top 500 listed companies.

Intelligent Helmets

As per a Frost & Sullivan 2018 report, the helmet market in India is estimated at Rs 1,395 crore. The domestic demand for two-wheeler helmets stood at nearly 20 million units in FY18. In terms of volumes, Studds has the largest share (25.66 per cent), followed by Vega (11.05 per cent) and Steelbird (10.87 per cent). The unorganised segment accounted for 30 per cent two-wheeler helmets sold in 2017/18. This is likely to fall as manufacturing, sale and use of non-ISI helmets will become a criminal offence from October. Studds holds a 27.79 per cent market share in the premium segment, followed by global players such as LS2 (20.16 per cent), MT (15.41 per cent) and THH (11.26 per cent).

"The market is moving towards intelligent helmets," says Sidhartha. In the premium segment, it already has a bluetooth-enabled 'intelligent helmet'. There are plans to launch more such helmets with camera, video recorder connected to cloud, LED lights, intercom and a small screen to launch Google Maps.

The company is looking at opening exclusive outlets in various cities. It aims to double its manufacturing capacity to 136 lakh helmets and motorcycle accessories (121 lakh motorcycle helmets and accessories and 15 lakh bicycle helmets) in the coming years.

The highlight of his 50-year journey, says Madhu Khurana, was keeping the brand name and letting go the manufacturing unit during the split with his brother that paid off well. "It was a brave decision at that time as concept of brand value was not popular, but it made all the difference."